We have shown in previous studies that two types of GTP-regulatory proteins, designated Ns and Ni, are ubiquitously present in the surface membrane of animal cells. A prominent role of Ns and Ni is to stimulate and inhibit adenylate cyclase, respectively. A large number of hormone or neurotransmitter receptors are coupable to these proteins; when occupied by agonists, the receptors promote "activation" of the N proteins with resultant enhancement of either inhibition of adenylate cyclase activity either in cells or isolated plasma membrane preparations. Recently, I have found that treatment of S49 lymphoma cells with phorbol esters (potent tumor promoting substances) blocks the ability of somatostatin to regulate the inhibition of adenylate cyclase through its receptor coupled to an Ni unit. This response to phorbol esters is prompt (within 5 min.) and very sensitive (half-maximal dose, 1 nM). Concomitant with the loss of somatostatin action was a modest increase in cyclic AMP production in the absence of added stimuli. These findings are consistent with modification of the Ni unit with the result that it is not activated by the liganded somatostatin receptor and is ineffective as an inhibitor of adenylate cyclase. The importance of the finding is that it suggests means of regulating cyclic AMP production other than through receptors that are directly coupled to GTP-regulatory proteins. Protein kinase C, known to be activated by phorbol esters in the plasma membrane, may be responsible for modifying Ni in S49 cells.